hoover

Big Banks: The Consensus Is Cracking

Capatilism is failing precisely because mega monopolies are allowed to exist, reducing their need to compete in the market, while creating an impossible playing field for their competitors. The idiotic "too big to fail" lunacy reduces these worthless giant's need to compete to ZERO! Even a kid can see that a monoply game rigged toward one player (like, a rule that Joey is not allowed to lose) while the other three players have to compete with him, has a pre-determined winner. When you end the rewarding of those that produce the best product or service for the best price, it is the end of capitalism and prosperity.

Solving the Bank Crisis: More TARPs Are Not the Answer

I don't understand why no one suggests the answer to this whole economic mess is to break up the big banks into 20 or 30 smaller banks, each competing with one another. A 1/20th or 1/30th of Citibank or Bank of America would still be a very large bank. But it might be of a manageable size. Isn't the problem with banks the same as the problem with the auto companies, GE, and all other Golliath sized corporations? They are not too big to fail -- they are TOO BIG TO EFFECTIVELY MANAGE. Their size allows them to grow only because size offers great advantages in elbowing other companies out of the way using "under-the-radar" momopolistic schemes, lobbying power, high tech schemes that don't triigger antiquated antitrust laws, geographical advantage, and giant borrowing power -- plus a government that does not aggressivly enforce antitrust laws. They use these methods rather than producing a better product at a better price, to gain market share. Do you really believe the U.S. auto industry would be bankrupt if there were 40 auto manufacturers competitng with each other rather than 3 (or make that 2 1/2). I, for one, don't. Decades ago, economists sometimes referred to the law of diminishing returns -- the bigger the production the less efficient it gets after a point. Just an opinion for thought.

Home Prices May Be Nearing Bottom, Bank Equities to Follow?

I can't count the number of times during the past two years that "housing is bottoming". Maybe it is, or maybe its getting ready to drop another 20%. But, I do agree that replacement cost, which is not dropping much, is a theoretical price support for housing. One could of course argue that in time even replacement costs may drop (caused by falling material prices and falling labor). Another thing that helps support housing prices psychologically is government regarding property taxes -- counties will overvalue assessed values to rake in as much taxes as possible. Buyers (assuming there are any) do look at assessed values in determining what fair value is.